Key overnight events:
- Two bombs went off in succession at the Belgian airport and an explosion an hour later hit a subway station near the EU’s headquarters, leaving 34 dead and almost 200 injured.
- The S&P 500 Index fell 0.1% with the gauge still trading near its highest level of the year. Transportation stocks led declines while biotech stocks led gainers.
- Crude oil futures expiring in May were largely unaffected by the attacks as it continued to trade between $40.50/bbl and $42.00/bbl before finally settling 0.7% lower at $41.22/bbl. US oil stockpiles are forecast to have risen last week, keeping supplies at their highest since 1930.
- The Fed’s Chicago President Charles Evans commented that economic fundamentals are “really quite good” and wants long-term yields to rise “organically”.
- The Bloomberg Dollar Spot Index added 0.1% in a third day of gains. The pound was the worst performer among 16 major currencies, with yesterday’s terrorist attacks providing more arguments against migrants and refugees and thus increasing Brexit risks, according to emailed comments from Bank of America Merrill Lynch.
- Spot 1.3617
- USDSGD has stabilised, fluctuating around the 1.3600 handle for most of the past 48 hours.
- Core inflation data is due for release later today and is expected to have slowed to 0.3% year-on-year in February from 0.4% year-on-year the previous month.
- Spot 0.7627
- In a speech yesterday, RBA Governor Stevens said Australia’s economy is adjusting quite well to falling commodity prices and subsequent decline in terms of trade. He added that in the event of a serious economic downturn, there would be more room to ease both monetary and fiscal policy.
- AUDUSD bulls have retaken the 0.7600 handle, as the currency pair reached a high of 0.7649 this morning.
- Spot 1.3075
- Prime Minister Justin Trudeau announced yesterday new fiscal stimulus measures, totalling C$120 billion over 6 years, which will boost the economy further by about 0.5% this year and bolstering the case for interest rates remaining unchanged at the current 0.5%.
- Further highlights of the new budget entails enhanced spending on infrastructure, child benefits and tax cuts for the middle class. A record bond issuance of C$133 billion in 2016-17 will be held to finance the deficit.
- USDCAD continues to be supported above the 1.3000 level, failing to generate any major moves following last night’s budget announcement.
- Spot 6.4932
- USDCNH rose for the first time in 4 days after China’s FX regulator said the nation may roll out a tax to help curb speculative currency trading.
- USDCNH fell as much as 0.1% this morning to 6.4892 as the PBOC strengthened its daily reference rate by 0.05%.
- Spot 8.4037
- USDNOK failed to hold above its 200-day moving average of 8.4344 after briefly trading up to 8.4669 last night. Gains have been pared back towards the 8.4000 handle.